"The ostensible purpose is to promote savings. The argument is suspect because there are other fixed income instruments which offer better returns (than KVP)," he said in a statement.

Under the new scheme, the invested money in KVPs will double in 100 months. KVP, a certificate savings scheme was launched in April, 1988 and money used to get doubled in 5.5 years. However, the scheme was discontinued in November 2011.

Chidambaram also expressed concern over the provision of transfer of re-launched KVPs.

"Will a KVP be freely transferable without any limit on the number of transfers? If so, what is the use of applying KYC (Know Your Customer) to the first purchaser?" he asked.

With the objective to raise savings in the country, the government yesterday re-launched KVP, an instrument which will provide trusted option of investment to poor and keep them off ponzi schemes.

"In the last 2-3 years, savings rate in country has declined from a record high of 36.8 per cent to below 30 per cent due to slowdown in the economy. It is, therefore, necessary to encourage people to save more," Finance Minister Arun Jaitley had said during the launch of the revamped KVP.

Available in the denomination of Rs 1,000, 5,000, 10,000 and 50,000, the amount invested in KVP would be doubled in 100 months. KVP, which has no upper ceiling for investment, can be encashed after a lock-in period of 30 months.

Initially, the certificates will be sold through post offices, but the same will soon be made available to the investing public through designated branches of nationalised banks.